05-15-2011, 04:12 PM
Kevin Drum had a blog posting on essentially the same question a couple of days ago (the day after I posted the OP):
http://motherjones.com/kevin-drum/2011/0...qus_thread
http://motherjones.com/kevin-drum/2011/0...qus_thread
Top marginal rates went down under Reagan and growth was good. They went up under Clinton and growth was good. They went down again under Bush and growth was sluggish. That's not a slam dunk case, but it's at least actual evidence suggesting a pretty weak relationship between growth and taxes. Of course you can say that maybe growth would have been better in all three cases if tax rates had been even lower, but that's only because you can say anything. But where's the evidence?
Later there's this:
My basic view is that, for the reasons Alan Viard and others have carefully explained, high marginal tax rates have negative incentive effects that outweigh the potential revenue gains....
So I clicked the link. And Viard, again, doesn't present any evidence at all, careful or otherwise. Go ahead and see for yourself. There's a section titled "The Harm from High Marginal Tax Rates," but all it does is explain in general terms that taxes on income reduce the returns to work. This is so obviously true that I'm pretty sure no one has ever disputed it. The question is whether, in the real world, higher tax rates actually reduce the amount of work people are willing to do. As it happens, there's some evidence in both directions, and there's evidence suggesting different answers for different groups of people. Beyond that, we'd also like to know how big the effect is. How it compares to other ways of raising revenue. What the distributional impacts are. Etc.